This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/30/2018
Overview
Energy Sector
 2015201620172018 estimated
Total Local Production13801,4801,4901,500
Total Exports270285290300
Total Imports36604,0404,3804,600
Imports from the US53566580
Total Market Size47705,2355,5805,800
Exchange Rates2.702.903.504.70
(total market size = (total local production + imports) - exports)                                                                                                                      Units: $ millions
Source: Ministry of Energy and Natural Resources, State Institute of Statistics.
Turkey is Europe’s 6th largest electricity market; 84% of power generation comes from the private sector and 16% from state-owned EUAS.  The 2017 power generation growth rate was 7.7%, while demand increased by 5.6%.  Turkey has a semi-liberalized, but regulated market.  EXIST (Energy Exchange Istanbul) is the electricity spot market of Turkey, which includes day-ahead and intraday markets, where 40% of electricity is traded with 854 market participants. Electricity prices in real time can be followed in EXIST’s website.
Turkey will spend $110 billion on energy investments by 2023 (the centennial of the Turkish Republic), distributed as $27 billion for nuclear power plants; $22 billion for wind power; $17 billion for hydroelectric; $15 billion for the network; $14 billion for coal mining development and coal-fired power plants; $7 billion for solar power; $3 billion for gas-fired power plants; and $5 billion for other types of plants.  The Ministry of Energy and Natural Resources (MENR) predicts that Turkey’s current electricity demand of 280 TWh will increase to 414 TWh by 2023.
Turkey’s electric energy generation capacity reached 85,200 MW at the end of 2017, generating 295.5 billion kWh of electricity.  Natural gas-fired power plants provided 37% of this power generation, coal-fired power plants provided 33%, hydroelectric 20%, wind energy 6%, geothermal 2%, and other resources 2%.
Turkey is targeting an additional 10,000 MW increase in both wind and solar energy installed capacity within 10 years.  Turkey plans to have a total installed capacity of 34,000 MW in hydroelectric energy and 1,000 MW in biomass energy.  Having reached 1,155 MW of installed capacity, the new target for geothermal energy is 4000 MW by 2030.  U.S. firms have been successful in supplying equipment in the renewable energy market.
MENR has a new policy to increase exploration and production of indigenous energy resources with the target of 2/3 of electricity generation coming from domestic energy resources by 2020.  Currently, this ratio is approximately 52%.  The reason for this strategy is that the cost of energy commodity imports, such as oil, gas and coal, continues to exceed $50 billion annually, increasing Turkey’s current account deficit.  Turkey plans to decrease this amount by using domestic resources such as lignite coal, renewables and nuclear energy. 
The Turkish Government has been tendering licenses for the development of new coal fields integrated with new coal-fired plants, which are estimated to be 18.5 GW.  The license winners will develop the coal mines with the proven reserves, build the power plants, and operate them for 30 years with special incentive prices guaranteed to be considerably higher than the spot market price.  These newly introduced incentives will increase local production of coal mines, which means development of new coal mines.  Therefore, mining equipment demand will increase during the next five years in Turkey.
Turkey imports coking coal and steam coal from the United States for several industries in Turkey such as the steel industry, cement plants and for the consumption by coal-fired power plants at the Mediterranean Sea and Black Sea coasts.  However, these U.S. coal exports will likely be affected by March 2018 U.S. tariff increases on imports of steel.  In retaliation to the U.S. steel tariffs in June 2018, Turkey imposed an additional 5% tariff on imports of coal from the United States.  U.S. coal suppliers compete with suppliers from Russia, Ukraine, South Africa, South American countries and Australia.
Turkey has also started importing LNG from the United States and, depending on price, initial amounts may increase as demand peaks in the winter.

Renewable Energy
At the end of 2017, Turkey’s wind energy installed capacity reached 6,516 MW, solar capacity tripled to 2,642 MW and geothermal capacity reached 1,100 MW.
Turkey’s ambitious vision for 2023 includes the following targets for renewable energy: renewables will meet 30% of installed power capacity of 120 GW (estimate for 2023); hydroelectric power plant capacity will reach 34 GW; wind energy capacity will reach 20 GW; solar will reach 5 GW; geothermal energy capacity will reach 4000 MW; and waste-to-energy power plant capacities will reach 1000 MW.  An estimated $46 billion will be invested for newly built solar, wind and hydroelectric power plants by 2023.
MENR developed a new model, the YEKA Renewable Energy Zone, through which MENR awards contracts to investors that provide power purchase guarantees for every 1000 MW of solar or wind power generated on the condition that the investor builds manufacturing facilities for 500 MW of solar or wind power equipment in-country. 
The General Directorate of Renewable Energy within MENR announced the following candidate locations for the next YEKA renewable energy projects to be announced in 2018:
New Wind Energy YEKA Candidate Locations:
  • Saros
  • Gelibolu
  • Kıyıkoy
New Solar Energy YEKA Candidate Locations:
  • Hatay-Erzin
  • Nigde-Bor
  • Sanliurfa
In addition to this methodology, renewable energy investments below 1 MW do not require a license, but require permission from the regional electric distribution company when there is a need to connect to the grid.  If the electricity produced is used solely at the investor’s premises, such permission is not required. 
MENR is targeting a 10,000 MW/year increase in both solar and wind energy installed capacity within 10 years.

Nuclear Energy Investments
Turkey’s target is to meet 10% of electricity demand from nuclear energy and it plans to have two fully operational nuclear power plants (NPP) by 2028.  For this reason, the Turkish Government signed two intergovernmental agreements (IGAs), one with Russia and one with Japan.  The Russian project in Akkuyu will have four 1,200 MW VVER units (4,800 MW) costing approximately $20 billion.  The second NPP to be built in the province of Sinop by a Japanese-French-Turkish consortium will have a total capacity of 4,480 MW (4 units of ATMEA1) under Public-Private-Partnership (PPP) at a total estimated cost of $22 billion.  A feasibility study for a third NPP is being conducted by another consortium.
Mitsubishi Heavy Industries, Areva, and Engie (51%) and Turkish national power generation company EUAS (49%) will be the Sinop NPP shareholders.  It will generate 40 billion kWh of electricity annually, with the first unit starting operations in 2023 and the last unit in 2028.  Japan will provide $17-18 billion in credit.  The 100% power purchase guarantee will be for 20 years and the power plant will operate for 60 years.  After 20 years, the power plant will sell electricity on the spot market as an IPP.  The Project Company will develop a localization plan (including the local content rate) and a technology transfer plan based on the local content rate.  However, it is reported that the initial cost of 2.1 trillion yen ($20 billion) has climbed to 4 trillion yen ($38 billion) since the agreement for the plant was signed in 2013.  For this reason, the Itochu company pulled out of the consortium earlier this year.  Japanese companies have told Turkish officials that it will be difficult to complete the project by 2023.
A draft nuclear energy law is under consideration and envisages the Turkish Government being responsible for disposal of radioactive waste and spent fuel. 

Electricity Distribution Network Renovation and Smart Grid
There are 21 regional electricity distribution companies (DisCos) in Turkey and all are fully privatized.  Technical and non-technical losses in electricity distribution varies from region to region and ranges between 6-40%.  The average loss in distribution grids is 15%.  To lower these losses and upgrade the grid, DisCos invested 4.3 billion TL (approx. $1.1 billion) in 2016 and 5.9 billion TL (approx. $1.5 billion) in 2017.  Further investments to improve the grids are expected to follow in 2018 and 2019.  DisCos have spared TL 200 million (approx. $45 million) just for R&D investments, which include grid upgrade technologies, smart grid, and energy storage.
The DisCos’ goal is to renovate the entire grid by 2020 and then quickly convert to smart grid.  For this purpose, ELDER, the Association of Distribution System Operators, initiated the Smart Grid Roadmap 2023 project with the participation of all DisCos.
The Energy Market Regulatory Authority (EMRA) receives, evaluates and allows expenditures from DisCos for their potential investments in grid upgrades as reflected in consumers’ bills.  EMRA allows DisCos to invest 5% of grid upgrade investments on implementation of smart grid systems.
MENR’s 5-year strategic plan looks to decrease distribution utility losses to 10% on average by 2020.

Electricity Transmission
The Turkish Electricity Transmission Company (TEIAS) is the only electric transmission company owned by the state while all 21 DisCos are private.  TEIAS owns and operates 66,453 km of high voltage transmission lines, 729 sub-stations with 163,849 MVA power capacity covering all of Turkey.  The transmission lines are 30-40 years old; TEIAS has so far renovated 30% of the lines and plans to renovate the remaining 70% by 2020, with plans to spend approximately $3.3 billion to accomplish this.  TEIAS experienced blackouts in recent years due to some technical failures.  Therefore, air-surveillance, repair and maintenance have become a priority.  U.S. firms offering such services should contact TEIAS for potential opportunities.
Energy Exchange Istanbul (EXIST):  Electricity trading companies though EXIST trade electricity by quoting prices on the “day-ahead market,” the “intra-day market” and the “balancing power market.”  Interested parties can follow electricity prices online at EXIST’s website (https://www.epias.com.tr/en).  Prices are quoted on a Turkish Lira per MWh (TL/MWh) basis.  EPIAS (Energy Markets Operation, Inc.) operates EXIST under a special law.  
Natural Gas Commodity Market: the Turkish Government plans to establish, under EXIST, a new natural gas commodity market soon to trade natural gas supplies.  It is also a government target to establish an energy hub where natural gas supplied from countries in the region will be dispatched to Europe.
Natural Gas Storage:  MENR is targeting 20% natural gas storage capacity.  For this purpose, state-owned energy company Botas held tenders to increase the existing capacity of 1 bcm storage at the Salt Lake (Tuz Golu) to 5.4 bcm.  The capacity of the storage facility in Silivri will also be increased to 4.6 bcm.  MENR gives importance to FSRU (Floating Storage Regasification Unit) projects as well, with two in operation and an additional two being considered.
TANAP Trans Anatolian Natural Gas Pipeline Project (Southern Gas Corridor):  This $9.2 billion pipeline project, will start at the Georgia-Turkey border and extend to the Turkey-Greece border at a total length of 1,850 km (1,810 km onshore + 2 X 19 km offshore). The initial transportation capacity is 16 billion cubic meters per annum (bcma) (570 billion cubic feet) (expandable to 31 bcma--1.1 trillion cubic feet).  The new pipeline will initially supply 10 bcma of gas to Europe and 6 bcma of gas to Turkey.  The gas will be sourced from Azerbaijan's Shah Deniz II field in the Caspian Sea.
The gas supply from Azerbaijan through the TANAP pipeline started flowing to Turkey in June 2018.  TANAP is part of the Southern Gas Corridor (SGC), which will bring Azeri gas to the European Union.  The SGC consists of three pipelines: the South Caucasus Pipeline Extension from Shah Deniz, which will transport the gas via Azerbaijan and Georgia, the TANAP pipeline via Turkey, and the TAP pipeline, which starts from Greece and will take the gas across Albania and then via an offshore section in the Adriatic to Italy.  The first gas is expected to flow via SGC in 2019-2020.  A branch is expected to take Azeri gas from Greece to Bulgaria and further north.

Leading Sub-Sectors
  • Smart grid systems (SCADA, GIS, AMR, AMI, Automated Demand Side Management, PLC and other communication systems, Volt-VAR control systems, OT, CIS, Control Centers, etc.)
  • Grid modernization and voltage and frequency regulation systems
  • FSRUs (Floating Storage Regasification Unit)
  • LNG Facilities
  • Solar energy power generation engineering and design services
  • Geothermal power plant equipment
  • Waste-to-energy systems
  • Wind turbines and generators
  • Energy storage systems
  • Smart LED Lighting Systems
  • Fuel cells
  • Hydroelectric turbines and coal gasification systems
  • Natural gas pipeline compressors, pumps, valves, pumps and other pipeline-related equipment and services
  • Nuclear consultancy and nuclear power plant equipment and services
Opportunities
The U.S. Department of Commerce’s International Trade Administration identifies Turkey as a top destination  for U.S. smart grid technology, renewable energy and civil nuclear exports (see www.trade.gov/topmarkets). U.S. During the next five years, implementation of smart grid systems and projects will create major opportunities in Turkey.  The 21 DisCos will implement grid upgrades and smart grid systems to decrease the 15% average technical and non-technical losses to an average nationwide loss of 10% by 2020.  Such investments for transmission and distribution lines will total up to $8.1 billion.
Other opportunities exist in solar, wind, waste-to-energy, geothermal and hydroelectric energy projects.  Although cost is important, many Turkish firms seek high efficiency, quality American products with financing and operational experience.  Additionally, roof-top solar power generation and energy storage investments will create many opportunities.
Smart LED street lighting, expansion projects for refinery and petrochemical facilities, FSRU and local LNG equipment supply projects will be other opportunities.  Coal supply to Turkey will still be attractive.
The U.S. Trade & Development Agency, U.S. ExIm Bank and the Overseas Private Investment Corporation would consider financing renewable energy projects in Turkey. U.S. ExIm Bank provides financing for renewable energy projects with a repayment period of 18 years after project commissioning.

Web Resources
For project financing, see: For further information on the energy sector, contact:
Serdar Cetinkaya
Energy and Extraction Industries Leader
U.S. Commercial Service
U.S. Embassy, Ankara, Turkey
Serdar.Cetinkaya@trade.gov
www.export.gov/turkey

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Turkey Energy Trade Development and Promotion